Social Security: Hurting but still treatable

Apr 24, 2012 | 1:25 PM

Can politics ever be subordinated for the public good? Anyone watching Democrats and Republicans bicker today might believe that impossible. Certainly, Washington has had plenty of opportunities in the past two years on matters of budget and taxes and federal debt to rise to the occasion and has consistently failed to do so.

But it doesn't have to work that way. In 1983, President Ronald Reagan and Congressional leaders, Democrats and Republicans, worked out a compromise to ensure that Social Security remained solvent for decades to come. Their solution involved both higher payroll taxes and lower benefits, including delaying when younger people could retire and receive full benefits.

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Today, the terms of the 1983 compromise are no longer sustainable. To keep Social Security solvent will require a similar negotiation.

That point was underscored this week with the release of a report by the trustees overseeing Social Security that funding for the program will run out in 2033, or three years earlier than projected last year. Insolvency is not imminent but, as the trustees have noted, the sooner a remedy is crafted, the better for all involved.

That's not just wishful thinking. Social Security is the oil tanker of government programs and doesn't turn on a dime. Corrections made early will be far less disruptive. Consider, for instance, the variety of factors that shortened the program's route to insolvency this past year — a higher cost-of-living adjustment as a result of rising energy prices and lower-than-expected worker earnings. The impact of such seemingly modest adjustments are huge because they resonate for years to come.

Indeed, the primary reason that the terms of the 1983 compromise no longer work is demographic — the population is aging, and people are living longer. As a result, they will draw far more money out of the program than did previous generations.

Medicare is in a similar boat, only it's sinking faster because of the added factor of rising health care costs in this country. Financing of a major portion of the health care program for seniors is expected to run out by 2024.

Yet what one hears from the politicians on the topic is mostly a lot of bunkum. Republicans inevitably get caught up in how the federal government spends Social Security surpluses (instead of keeping them in a mythical lockbox), or they offer exotic plans to privatize the system. Democrats simply hunker down and promise to fight for benefits and never mind that they aren't sustainable.

Neither course is especially responsible. Social Security is basically sound and doesn't need an overhaul, just tweaking. That ought to begin with sharing retirement funds with the disability program that's facing the most immediate funding shortfall.

But deciding exactly what adjustments to make, striking the correct balance between reductions in benefits and increasing taxes, will require a give and take. And that's something that seems impossible in the current political climate, particularly given the clout of the senior citizens' lobby and the GOP's absolutist views on taxing the affluent.

What's needed is for voters to reject those voices that either inflate the dimensions of the "crisis" or offer painless solutions. What's needed are open-minded people who don't take anti-tax or no-benefit-cut pledges but leave themselves some wiggle room.

In the 1980s, the negotiations started not with a plan from the White House or Congress but from an independent and bipartisan commission chaired by Alan Greenspan. Such a framework could be tried again in 2013, but the only question is whether Social Security's finances are in bad enough shape to justify the effort.

That's right. The "crisis" may not be big or immediate enough. In the early 1980s, the Social Security trust fund was seen as months away from potential insolvency, not a decade or more away, when negotiators sat down and worked out a compromise.

Yet that's no call for complacency. Should the trust fund actually be allowed to become insolvent, seniors could see their benefits cut by 25 percent immediately. The nation's elderly should not have to contemplate such a disaster for the politicians to become properly motivated to embrace some modest changes to the system.

Restoring the financial health of Social Security was possible at a time when one party ruled the House and the other the White House and Senate. The partisan roles may be reversed today, but the circumstances aren't all that much different — if elected leaders are willing to put the public good ahead of politics.